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Tether (USDT) Rated ‘D’ in New Stablecoin Credit Ratings List

2 mins
Updated by Kyle Baird
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In Brief

  • Tether (USDT) has received a 'D' rating from Bluechip, an independent nonprofit stablecoin rating agency, indicating high risk.
  • The rating agency suggested that Tether could improve its rating to 'C' by disclosing its banks and custodians or conducting a full financial audit.
  • Despite recent lawsuits from the SEC, Binance USD (BUSD) and Gemini USD (GUSD) received 'A' ratings, indicating strong governance and stability.
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Tether (USDT), the world’s most popular stablecoin, has not fared well in a new credit ratings list. The ratings are not official but may offer an insight into how institutions may view stablecoin stability and backing.

Bluechip, an independent nonprofit stablecoin rating agency, announced on July 22 that it would publish its new rating lists in August.

Stablecoin Ratings Questioned

Economist John Paul Koning commented that “This is a step forward.” He also noted that New York stablecoins GUSD, BUSD, and Paxos were getting the best ratings, “and rightfully so.”

He added that “offshore stablecoins” like Tether and TrueUSD have been “slapped with the worst ratings.”

Chairman of the U.S. House Committee on Financial Services, Patrick McHenry, also tweeted the stablecoin ratings list. 

Stablecoin ratings from Bluechip. Source: Twitter/@jp_konin
Stablecoin ratings from Bluechip. Source: Twitter/@jp_koning

Tether received an overall rating of ‘D,’ according to Bluechip.

The “high risk” branding was applied due to its lack of decentralization. There were issues with governance that included reserve verification and redemption transparency. It also branded Tether’s gold standard stablecoin XAUT with a ‘D.’ 

Bluechip stated that Tether can be upgraded to ‘C’ by “disclosing the names of its banks and custodians.” Additionally, it could also perform a complete financial audit by an independent auditor or “incorporate transparent and reasonable timelines for redemption in the Terms of Service,”

Chief economist at Bluechip, Garett Jones, explained, “A lot of our Bluechip stablecoin ratings turn on quality of governance.” “Piles of wealth invite predators of wealth, whether inside or outside the organization,” he added. 

However, Paolo Ardoino, the CTO of Tether, expressed his lack of impression with the rating by tweeting this meme on July 23.

The Best and the Worst Ratings

Strangely, Binance USD (BUSD) got an ‘A’ rating despite the SEC suing issuer Paxos as part of its war on crypto.

Fully regulated Gemini USD (GUSD) also got an ‘A’ rating, as did Liquity USD (LUSD) which often fluctuates from its peg. The SEC also targeted Gemini with a lawsuit.

The rating agency flagged Circle’s USD Coin (USDC) as a ‘B+.’ Despite being completely centralized, which caused it to lose points, Bluechip considered it as ‘low risk’ due to its governance properties.

The world’s third largest stablecoin, DAI, gained points for its decentralization and also received a ‘B+.’

The only stablecoin to rank at the bottom with an ‘F’ was Tron’s USDD. The asset had a red flag for lack of stability and governance. TrueUSD (TUSD), which has also been in the spotlight recently, also got a ‘D’ grade. 

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Martin Young
Martin Young is a seasoned cryptocurrency journalist and editor with over 7 years of experience covering the latest news and trends in the digital asset space. He is passionate about making complex blockchain, fintech, and macroeconomics concepts understandable for mainstream audiences.   Martin has been featured in top finance, technology, and crypto publications including BeInCrypto, CoinTelegraph, NewsBTC, FX Empire, and Asia Times. His articles provide an in-depth analysis of...